Camilla's, a high-fashion dress manufacturer, is planning to market a new cocktail -dress for the coming year. Camilla's supplies retailers primarily in the eastern states of Australia.

Four metres of material are required to lay out the dress pattern. Some material that could be sold remains after cutting. The leftover material could also be used to manufacture a matching wrap and handbag. However, if the leftover material is used for the wrap and handbag, more care will be required in the cutting operation, which will increase the cutting costs.

The company expects to sell 1 250 dresses. Market research reveals that dress sales will be 20 per cent higher if a matching wrap and handbag are available. The market research indicates that the wrap and handbag will be saleable only as accessories with the dress. The combination of dresses, wraps and handbags expected to be sold by retailers is as follows:

Unit cost to complete (excludes costs of Selling price material and cutting operation) per unit Dress $192.00 $480.00 Wrap 46.80 66.00 Handbag 15.60 22.80 Required